Sub-contract of services to be exported

1 "XYZ" is a software company registered in India. It exports taxable services to clients outside India. XYZ can export the services without payment of service tax since it satisfies the conditions of export of services.

2. "ABC"  company (registered in India) executes the project on behalf of "XYZ". The said services are exported as mentioned above.

3.: ABC" bills "XYZ" and gets payment from "XYZ" in convertible foreign exchange.

I have following query:

a) Whether "ABC" can claim exemption from Service tax? if yes then please guide under what section, notification?

b) If no exemption is available then can "XYZ" claim rebate of service tax under export of service tax rules as "input service"

Thank you,

Replies (1)

It is not exempted as ong as ABC provides the service to XYZ which is situated in India. XYZ can take cenvat credit of service tax paid by ABC. The credit may be usilised by XYZ for service tax payment if any or can be calimed as refund under rule 5 of the CCR.

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